A borrower applying for a Fannie Mae loan has an enforceable, unsatisfied $12,000 civil judgment. Under the Selling Guide's delinquent-credit rule, how must the judgment be handled?
Correct Answer
D) Pay it off at or before closing and document its satisfaction
Fannie Mae requires outstanding judgments to be paid off at or before closing. Exceptions for certain collection accounts or qualifying IRS installment arrangements are not a general repayment-plan exception for civil judgments. Age or omission from a credit report does not discharge the debt. Source: https://guide-selling.fanniemae.com/sel/b3-6-07/debts-paid-or-prior-closing
Why This Is the Correct Answer
Fannie Mae requires outstanding judgments to be paid off at or before closing. Exceptions for certain collection accounts or qualifying IRS installment arrangements are not a general repayment-plan exception for civil judgments. Age or omission from a credit report does not discharge the debt. Source: https://guide-selling.fanniemae.com/sel/b3-6-07/debts-paid-or-prior-closing
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